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Analyst urges video industry to reject HEVC Advance patent pool

The licensing terms put forth by HEVC Advance, a patent pool which may soon include companies like Technicolor, Dolby, Philips and Mitsubishi Electric, are "unfair and unreasonable" and the industry, including online video providers, should band together and refuse to pay, an industry analyst said.

Dan Rayburn, an analyst for Streaming Media, said in a blog post that not only are the group's proposed licensing rates too high -- HEVC Advance wants 0.5 percent of every content owner's or distributor's gross revenue from delivering 4K-quality HEVC or H.265 compressed video -- but the business case for the patent pool is not rational. Because the patents included in the pool are only just now being independently evaluated, "there is no way to know the validity of any of the patents in the pool" ahead of the organization's stated deadline of Oct. 1, when it opens to licensing deals with the industry.

HEVC Advance, headquartered in Boston, was formed in April with a goal of compiling 500-plus patents related to the technology, provided by member patent holders. The group appointed Barcelo, Harrison & Walker LLP as the independent patent evaluator in July, and began the evaluation process on Aug. 1. It also announced its royalty rate schedule in July, saying in a release that the schedule "was developed based on in-depth market analysis and collaborative input from HEVC patent owners and users in order to provide a structure that balances the needs of both licensees and licensors."

HEVC Advance had not responded to a request for comment by press time.

Patents have been a nattering issue around the online video industry for some time. Last year, Netflix prevailed in a lawsuit brought by Kudelski Group subsidiary OpenTV over use of patented streaming technologies. The SVOD provider in January came to an agreement with Kudelski that settled other outstanding lawsuits regarding the group's patents owned by both OpenTV and Nagra, which owns more than 3,000 patents.

Would content providers and owners prevail in a general boycott of HEVC Advance? Nothing is ever certain, but Rayburn pointed to past attempts to force companies to pay into a centralized patent pool rather than for individual licenses. For example, Via Licensing targeted broadcasters and set-top box makers with its pool of patents for DVB-MHP technology. The effect, Rayburn said, was that many companies abandoned development of the technology and instead opted to explore royalty-free HbbTV.

If HEVC Advanced proves to have a chilling effect on HEVC development, companies might similarly abandon the technology in favor of an alternative. Rayburn said Cisco's royalty-free video codec, Thor, or Google's VP9 are possible alternatives to HEVC.

HEVC Advance, for its part, says the patent pool will make things easier for industry players to license HEVC/H.265 technologies.

"HEVC Advance is dedicated to bringing HEVC to the global market by providing efficient and transparent access to necessary patent rights, at scale and in a fair, reasonable and balanced manner," said group CEO Peter Moller in the release. "The HEVC Avance [sic] patent pool will facilitate the success of device and content providers seeking to deliver next-generation digital experiences."

The group's first meeting, which includes both patent holders and patent users, is scheduled for Sept. 2 in Tokyo.

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